Are You a Scam Victim Waiting to Happen?

Outsmart clever con artists who prey on the vulnerable

Lack of Prevention: The research has not only found that victims expose themselves to sales situations and are more interested in persuasion statements used by con artists, but they also take fewer affirmative steps to actively avoid being defrauded. Several studies have shown that victims are less likely to be signed up for the Do Not Call list that limits sales calls and they are less likely to check references of a business before buying from that business.

Risk-Taking: Researchers have found that the willingness to take risks is correlated with fraud victimization. Studies of investment-fraud victims in particular have shown that more known victims had previously invested in risky investment instruments like oil-and-gas options, penny stocks, and gold coins than the general public had.

Victims also report that they simply prefer taking greater risks to get greater returns than the general public does. This correlation makes sense given that any fraudulent offer to invest will have characteristics of higher-risk offers that may be legitimate: higher-than-market returns, often not regulated by the government, an opportunity that requires a quick decision, and so on.

Low Self-Control: One of the most well-established theories in criminology is the correlation between low self-control and criminal behavior. People who commit crimes tend to have lower self-control than those who do not commit crimes. But newer research has explored whether crime victims and specifically fraud victims also tend to have less self-control than the general public. Preliminary research points in the direction that lower self-control correlates to exposure to fraud offers and may even correlate to victimization itself. More research needs to be done in this area, but the preliminary findings are promising.

The idea that victims of fraud would have lower self-control than the general public makes sense. After all, remember that the con artist’s primary strategy is to get the victim into a heightened emotional state so he or she will make a buying decision based on emotion and not facts. It stands to reason, then, that those who are prone to making impulsive decisions would be more likely to succumb to the con artist’s ether and become a victim.

Age: One of the most hotly debated questions in the fraud research world is whether older people are disproportionately victimized compared to younger people. While there have been a number of studies that suggest older people are not disproportionately victimized, other studies showed the average fraud victim’s age to be between 54 and 69 years old. Because researchers will never be able to randomly select from among the total universe of victims, we will likely never know for sure if older people are victimized more than young people. But since 2004, the FINRA Investor Education Foundation and AARP have conducted extensive interviews with more than 1,700 fraud victims (chosen based on the availability of lists, not age) and the vast majority of them were more than 50 years old, which tells us something about age as a vulnerability factor. And one simple explanation for this could be the answer famous bank robber Willie Sutton gave when asked why he robs banks: “That’s where the money is.” Individuals over age 50 control trillions of dollars in assets, and the scammers are acutely aware of this fact.